JOE BEL BRUNO, Associated Press |
August 22, 2008

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NEW YORK — Merrill Lynch & Co., Goldman Sachs Group and Deutsche Bank on Thursday joined other major financial companies in settling with regulators over their roles in selling risky auction-rate securities to retail investors.

The agreements bring to eight the number of global banks that have settled the five-month probe into claims they misled customers into believing the investments were safe. New York Attorney General Andrew Cuomo, leading the investigation on behalf of state and federal authorities, has now reached deals to buy back $57 billion worth of auction-rate securities.

Cuomo said Thursday he is far from finished in examining both large and small players in the market and said the investigation will intensify against Bank of America Corp. He also warned that the inquiry might shift its attention to individual brokers and bank employees who sold the investments.

"This has been a great day of progress," Cuomo told reporters. "We have a number of banks that are still under investigation, and we are obviously having conversations about resolution. The one thing the people want is their money back quickly."

He had been in talks with Merrill Lynch Chief Executive John Thain through most of the afternoon before reaching a deal. Cuomo had set a deadline of Thursday for the nation's largest brokerage to reach an agreement or face a lawsuit.

Thain said the brokerage, which last week agreed to repurchase the debt voluntarily, would "accelerate the plans" by buying back $10 billion to $12 billion of the investments from investors by Jan. 2 and paying a fine of $125 million.

Separately, Deutsche Bank, which must buy back about $1 billion of auction-rate securities, has been fined $15 million. Goldman Sachs has $1.5 billion in securities to buy back and will be fined $22.5 million.

UBS, Citigroup, Morgan Stanley, JPMorgan Chase & Co. and Wachovia Corp. had previously agreed to buy back their auction-rate securities. Also Thursday, Massachusetts Secretary of State William Galvin said Merrill Lynch agreed to settle a similar dispute.